Germany, largest economy in Europe and fourth largest economy in the world, is known as a highly industrialised country. It's the home for some of the most respected brands/organisations in the world like Mercedes, BMW, SAP, Siemens and Bosch etc. However in the field of internet, that has not been the case with Berlin known for being a copycat rather than being a true innovator. More often than not, the blame is on Samwer Brothers, Founders of Rocket Internet, who have been involved in building 100+ companies in online space in 40+ countries since 1999. The Samwers are revered for putting Berlin's start-up scene on the map and despised for sticking Germany with a reputation as the copycat capital of Europe. Not that the brothers take offense at the label. "There are pioneering entrepreneurs and execution entrepreneurs, and maybe we belong more to the execution entrepreneurs," says Oliver, one among the Samwer brothers. Let us look little more in detail about who Samwer brothers are and what Rocket Internet as an Organisation is all about.
Rocket Internet boasts itself as largest, fastest and most successful online venture builder. It has currently 75+ active online ventures in more than 50 countries, dozens of which has been exited successfully. Rocket Internet employs more than 700 employees with around 20,000+ employees working for the Rocket Portfolio companies. Oliver, in one of the very rare interviews, mentioned that more than 20 VC firms have invested with Rocket and also with its ventures, with the prominent ones being JP Morgan, Investment AB Kinnevik, Sweden and Holtzbrinck Ventures, Germany to name a few.
Rocket Internet sees itself more than a venture capital firm or an incubator. It just brings together an excellent team which rips off a big idea, mostly from an American firm, replicates it so well that, by the time when the US original has just stabilized in their local market and thinking of International expansion, these guys would have a copycat, with almost same logo and website design, up and running thus forcing the original to buyout this copycat to succeed in that market. Be it Amazon or eBay or GroupOn or Pinterest or Youtube or Facebook or Airbnb or Square or Stripe or Zynga or Fab or twitter, you name it and these people have got a copycat up and running in some country or the other growing at a healthy rate. In fact they have gone to an extent where one of the rip-offs is competing against the original in US market.
How do they do it?
"We take a pretty systematic look at models that are already out there and we basically try to define whether a model suits our competence and is large enough that it's worth it for us to go in there," explains Heinemann, the MD charged with Rocket's business intelligence in the buzzing offices of Zalando, an online shoe retailer inspired by Zappos. Rocket decides which business to launch not by performing lengthy analyses or conducting protracted business plans, but by looking for "structurally sustainable business models" where the cost of acquiring customers can be recouped over "a sensible time frame". And what is a sustainable time frame? "That really depends on the nature of the platform," Heinemann answers. "We usually try to make a business not necessarily profitable but generate a contribution margin over half a year. So, if you [spend money attracting] a customer, this customer should contribute to paying for the entire infrastructure after half a year." What If it doesn't happen? "We would usually end the business," Heinemann says, offering DealStreet and eCareer as two examples.
Love-Hate Relationship
Even though Samwer brothers were the sole reason for a huge start-up activity at Berlin in the Internet space, More often than not, they have been blamed for bringing discredit to the Germans by being known as the copycats and in the process making Berlin, the Capital for Copycat ventures. In one of the TV shows of TechBerlin, the host has even gone to an extent of saying that anyone working for Samwer should quit the job immediately to show the true German in them! In a yearly start-up fair that happened in Berlin, burning an effigy of Samwer brothers have become a custom of sorts to show their opposition to the clone kings and encourage youngsters to come up with innovative ideas to start their own firm and not just clone an existing one. Recently there has been some positive results with good number of start-ups emerging from Berlin with original ideas, SoundCloud.com being the most prominent among them.
References:
http://www.rocket-internet.de/
http://www.wired.co.uk/magazine/archive/2012/04/features/inside-the-clone-factory
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